Social insecurity

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NEW YORK - For seniors like Harry Thaw, the planned 2.1 percent increase in Social Security benefits next year probably won't make life much easier.

Mr. Thaw, 78, a retired handyman, stops almost daily at the city-subsidized Encore Senior Center in midtown Manhattan for the hot lunch, which costs $1. Every increase in the rent on his apartment means less for other things, like food and clothes, he said. Though he is not ill now, rising drug prices scare him.

"It's harder and harder to pay for anything," said Mr. Thaw, who lives on Social Security and a small pool of savings. "I have to live very frugally."

Frugality is the watchword for many of the nation's elderly who survive on fixed incomes.

Federal Reserve policies to keep interest rates low have meant seniors are earning little on savings in the bank accounts and money market funds they tend to favor. Although inflation has been moderate for the past couple of years, the prices of goods and services important to the elderly -- including medical care and fuel for home heating and cooling -- have risen rapidly.

Social Security benefits, which are adjusted annually for inflation, are tied to the Department of Labor's Consumer Price Index, which covers a range of products and services.

Last week, the Social Security Administration announced that beneficiaries will receive a 2.1 percent cost-of-living increase next year, providing an extra $19 a month for the typical retiree. For 2002, the increase was 1.4 percent.

The latest adjustment will raise the average monthly benefit for a single retiree to $922 from the current $903. For couples, checks will increase to an average of $1,523 a month from $1,492.

But for many older Americans, part of the gain will be erased by a 13.5 percent increase in Medicare premiums that also takes effect next year. Premiums will rise $7.90 a month to $66.60.